Sharp-Foxconn stake talks said to end without deal

Bloomberg

Tue, Feb 26, 2013 - Page 13

Sharp Corp’s talks with Taiwan’s Foxconn Technology Group (富士康科技集團) over an investment in the Japanese electronics maker will probably end on March 26 without an agreement, two people familiar with the discussions said.

Negotiations have not led to a deal partly because the companies cannot agree on a price after Sharp’s shares declined, said one of the people, both of whom asked not to be named because the talks are private.

The maker of Aquos televisions fell the most in two months yesterday, the biggest decline among companies on the Tokyo Stock Exchange.

Stumbling blocks in the talks also include management control and company strategy, one person said.

Japan’s largest maker of liquid-crystal displays said in November last year talks might continue beyond March.

Sharp is trying to raise funds as it forecasts a record full-year loss of ￥450 billion (US$4.8 billion) amid slow demand for its panels and TVs.

Foxconn, founded by billionaire Terry Gou (郭台銘), initially agreed in March last year to buy a 9.9 percent stake in Osaka-based Sharp for ￥550 a share. The deal foundered as Sharp’s shares plunged for seven straight months, reaching as low as ￥143, and as Foxconn said it would renegotiate the price.

The Mainichi Shimbun on Saturday reported that Sharp may suspend the share-sale talks, without saying where it got the information.

The Sankei Shimbun said the electronics maker is considering measures including a public share sale to raise capital by about ￥200 billion, without citing anyone.

“Discussions are ongoing,” Louis Woo (胡國輝), a spokesman for Taipei-based Foxconn, said by phone on Saturday. “We are not bound by any timetable.”

Hon Hai Precision Industrial Co (鴻海精密) chief financial officer Huang Chiu-lian (黃秋蓮) said in June last year that the company’s plans to take a stake in Sharp faced resistance from management and board members of the Japanese company. Sharp’s managers “fear the company becoming a part of Hon Hai,” Huang said at the time.

Hon Hai is the flagship company of Foxconn.

Discussions over other types of cooperation and the possible sales of Sharp factories to the Taiwanese company may continue, the two people familiar with the talks said.

Sharp sold a stake in an LCD factory in Sakai, central Japan, to Foxconn’s Gou in July last year.

Sharp is in talks with other companies on possible share sales and aims to include a deal in its medium-term business plan, which may be disclosed as early as next month, one of the people said.

The TV maker agreed in December last year to sell as much as ￥9.9 billion of new shares to San Diego-based Qualcomm Inc.